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It's tax time, and most Americans are trying to figure how much they owe the IRS. Still, many corporations and wealthy individuals have already prepared for the big day by assiduously spending money in deliberate ways to minimize their tax liability.

The result is billions in lost revenue for the government every year.

These are just some of the most galling tax deductions that are perfectly legal.

Several major U.S. corporations dodge domestic taxes by moving profits internationally to tax havens.
For example, a company can utilize the "double Irish" formula to minimize their U.S. taxes.

If the profits from the sale of a good stayed in the U.S., they would be taxed at the federal 35 percent rate. However, some companies sell the intellectual property rights to an Irish subsidiary to minimize tax obligations.

The profits from that U.S. sale are paid overseas to the Irish subsidiary. As long as the Irish subsidiary is controlled by managers elsewhere - for instance, a Caribbean tax haven - the profits can move around the world without a dime of taxation.

At this point, the profits are moved to a nation with no tax, skirting around the U.S. 35 percent rate.

This is the "Double" part of the Double Irish, and also entails a trip through the Netherlands.

When the same company's product is sold overseas, that profit is routed to a second Irish subsidiary, Since Ireland has treaties with the Netherlands to make inter-European transfers tax free, the profits are then routed through the Netherlands, and then back to the first Irish subsidiary, and then to the no-tax Caribbean Island.

As a result, the U.S. company never has to repatriate the money and they never has to pay taxes on the products.

Carried interest - profits made by private equity investment managers, hedge funds, venture capitalists, and real estate investment trusts - constitutes a major source of income for many financial professionals.

However, carried interest isn't taxed as income. Instead, it's taxed at the capital gains rate, which, at 15 percent, is considerably less than the top bracket tax rate of 39.6 percent that many of the financial professionals would pay.

Facebook reported $1.1 billion in pre-tax profits in 2012, but paid zero federal and state taxes while receiving a federal tax refund of around $429 million.

The reason is that the company took a multi-billion dollar tax deduction for the cost of executive stock options and share awards following their IPO.

In essence, Facebook was able to write off its entire federal tax obligation and more for paying its executives. This has raised the ire of a number of people in Washington, including Michigan Democratic Senator Carl Levin.

A line in the tax code allows a depreciation schedule of five years for private jets instead of seven, the standard for the rest of the airline industry.

Depreciation is an income tax deduction that allows taxpayers to recover the cost of buying the jet. This means that private jet owners can write off their expenses faster (in five years) and make back the money for the jet in less time.
This costs the U.S. government $300 million annually.

Originally designed for small farmers trading assets like livestock or property, the Section 1031 tax break allowed two farmers to avoid capital gains taxes on those transactions.

Since then, major corporations have successfully lobbied for an expansion. Because of this, many companies can go about their business of buying and selling assets, but can escape the capital gains tax, as long as they use all the proceeds from a sale to buy a "like-kind" asset.

For example, a real estate investment group can avoid taxation on a major land sale by invoking Section 1031, and using all proceeds from the sale on another land buy.

Wells Fargo, Cendant, and General Electric were recently sued for abusing the practice, but the law remains on the books.

In 2011 you could write-off the full cost of an SUV, provided it was used exclusively for business and weighed more than 6,000 pounds.

Since then the relevant section of the tax code — Section 179 — has been scaled back significantly, but the process still allows people to deduct the full purchase price of qualifying equipment or software if it's used for business.

Today, acceptable write-offs include taxis and vehicles that can seat more than nine passengers, have no seating behind the drivers seat, have a fully enclosed driver's compartment, or have a cargo area at least six feet in length (like a pickup truck).

When an executive flies on a private plane for business reasons, the company pays the bill and deducts the expense. However, if the flight is provided to the executive for personal reasons, the executives are required to pay income taxes on the amount the company paid for the flight, as the IRS considers travel as a form of compensation.

But if an outside security consultant says that the executives need a private jet for security reasons, the executive doesn't need to pay the tax.

According to Dealbook, it's "a common corporate tax trick," that allows many virtually anonymous executives - Melvin J. Gordon of Tootsie Roll Industries, Terry Lundgren of Macy's, the heads of Cablevision, Time Warner, Kraft, Waste Management, and Home Depot, for instance - to enjoy the kind of "security" that Apple didn't bother providing Steve Jobs.

Board members are also frequently rewarded with flights for "security" purposes.

As part of the TARP bailout, NASCAR owners got a huge tax gift written into the tax code. It's still around today, as it was extended for another year as part of the "Fiscal Cliff" deal.

Much like the private jet depreciation advantage, NASCAR track owners are now allowed to write off the cost of building facilities in seven years, rather than the 39 years the government estimates it actually takes for the tracks to depreciate.

This means that NASCAR track owners make their money back even faster, but the government loses $40 million each year.

How much house can I afford

TurboTax Articles

It's been said by many that looking for a job is a job in itself. The Internal Revenue Service (IRS) allows the deduction related to some costs of job hunting, the same way employees can deduct some unreimbursed job expenses. Not all job searches qualify, though, so it's wise to educate yourself on the rules.

The Affordable Care Act, or Obamacare, requires certain employers to offer health insurance coverage to full-time employees and their dependents. Further, those employers must send an annual statement to all employees eligible for coverage describing the insurance available to them. The Internal Revenue Service (IRS) created Form 1095-C to serve as that statement.

If you paid interest on a qualified student loan, you may be able to deduct some or even all of that interest on your federal income tax return. Student loan companies use IRS Form 1098-E to report how much you paid in interest. Borrowers get a copy of this form, and so does the IRS.

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Rob

Loopholes not. Are you upset because the farmer or construction worker can depreciate their truck. What are they going to haul their tradecraft and materials in - a Prius? Money earned overseas is not subject to taxes unless brought into the country - how does that not make sense? Most CEO's probably do need the extra security especially if they are high profile.Some of these could go by the wayside but by and large I would not call all of them outrageous. If you actually live in a houseboat would you allow the mortgage interest deduction for that. I think after you reach a certain income level you pay the AMT anyway so some of those deductions go away. Just more sniping at those who may have money and use what is available in the code. What does not make sense in the tax code is giving earned income credit. What is that really? Welfare that is what it is. How about child care tax credits isn't that merely your cost of having a family? You already get a deduction for the children and child tax credits, at least unless you make too much money. Use that to offset your daycare expenses.Want to save the country some money - stop paying unwed mothers. Even though I don't personally approve how about we just pay for the condom or birth control and if you still have a child you are on your own hold the man, for lack of a lessor word, responsible to provide for the child. One has to wonder if the high birth rate among unwed girls is due in part to how they are supported by the state.

I think if we went back to the 1950's tax codes and the wealthy had to pay % wise 91 or 92 percent with the loopholes they had back then or stay with what they have today? they would want to stick with today's tax rates. WHO YOU KIDDING. LOL i just feel if everyone wants to be honest, flat tax is pretty simple start at 15% for everyone no credits or loopholes for kids or income! just a simple tax code you get a buck in your hand no matter how, pay 15cents until we fix things up.. then we drop it to 10cents or lower. Mitt paid 13% with millions I pay 28% in middle class? yea less change up. lol

These are not loopholes any more than earned income credits, , child care credits, or any other deductions or credits, they are all called the United States income tax code. Blame congress and the Presidents for the last 50 year or more. For get saying that income tax rates used to be up to 90%, during that time therewere more ways to not only have deductions but a dollar could be turned into six dollars of deduction. Remember also when you book profits in a foreign country, to bring it back to the US you pay full income tax less a deduction for the tax you paid in the foreign country. That mean our tax code keeps billions overseas never to be used in the US. Blame congress and the Presidents, unless you are one that writes a check to the government every April 15 for a gift above what you owe. Don't blame anyone for doing their taxes according to the tax code. Change the entire tax code,

Until the loopholes for the rich and the beg corporations are stopped this country will stay in debt and continue to have recessions and finally collapse as did with past empires in history due to the greed of these type of individuals and corporations adding in the oversized gov't we have..history proves this to be a fact.

LMAO ... you foolish imp. The money saved by taxpayers due to using tax loopholes amounts to almost nothing related to the Nation\'s Debt. It would barely be a dot on a graph the size of a jumbotron. However, the money saved by corporations and individuals via tax loopholes is used to further stimulate business and the economy rather than being vaporized by a government that wastes half of what it receives in tax revenue. No doubt, you are a product of the Left. One day you will realize you have been lied to.

If the loopholes for the rich and the big companies would be cut out we would not be in a recession it is the cause of the problems economically in this country to begin with and was the cause of failed empires in history along with the final element called to beig of gov't.

WE need to have a consumption tax. That is the only fair way to tax people. The problem is the libs won’t do that because they won’t be able to steal from the middle class and the conservatives won’t be able to give corporations breaks. Both parties are thieves. The answer is simple. STOP paying taxes. If we don’t give them money they will go away and look to steal it from somebody else.